Common use of Royalty Reduction Clause in Contracts

Royalty Reduction. (a) If (i) Company, in its reasonable judgment, determines that it is required to obtain a license from any Third Party in order to avoid infringement of such Third Party’s Patent Rights as a result of the practice of the BMS Patent Rights and/or the BMS Know-How in connection with the Development and/or Commercialization (but excluding manufacturing) of any Licensed Product, (ii) such Third Party’s Patent Rights [***], and (iii) Company is required to pay to such Third Party a royalty or milestone payments in consideration for the grant or maintenance of such license (“Third Party Compensation”), then the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall be reduced by [***] percent ([***]%) of all Third Party Compensation payable by or on behalf of Company to such Third Party, provided that, in no event shall the royalty reductions described in this Section 8.4.4(a) act to reduce the royalties payable by Company to less than [***] percent ([***]%) of the amounts payable by Company for a given [***] pursuant to Section 8.4.1. Certain information marked as [***] has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. (b) If, during the Royalty Term in a particular country where one or more Generic Products with respect to a Licensed Product are sold in that country, the royalty rates set out in Section 8.4.1 shall be reduced: (i) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market; (ii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market; and (iii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market. (c) Notwithstanding the foregoing, in no event shall the royalty reductions described in this Section 8.4.4 act to reduce the royalties payable by Company to less than [***].

Royalty Reduction. Should (a1) If (i) Companythe Patents and the Orphan Drug Status expire before the Royalty Expiration Date and there be no Patent containing at least one Valid Claim and no Orphan Drug Status and no other statutory exclusivity be in place which would prevent the sale of a generic version of the Product, and should, in its reasonable judgmentthis situation, determines that it is required to obtain any generic product occur or (2) the Product be approved by the Health Regulatory Authority outside the Field based on an application by Schering, any of Schering’s Affiliates or a license from any Third Party in order to avoid infringement licensee of such Third Party’s Patent Rights as a result of Schering other than Exhale (hereinafter the practice of the BMS Patent Rights and/or the BMS Know-How in connection with the Development and/or Commercialization (but excluding manufacturing) of any Licensed “Second Product, (ii) such Third Party’s Patent Rights [***], and (iii) Company is required to pay to such Third Party a royalty or milestone payments in consideration for the grant or maintenance of such license (“Third Party Compensation”), then and should this Second Product be used off-label in the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall be reduced by Field, and should sales of these generic products or sales of the Second Product for off-label use in the Field exceed [***] percent ([***]] %) of all Exhale’s Net Sales in any six (6) months period (as measured for generic products by IMS data or similar data, and for off-label use through a recognized independent Third Party Compensation payable audit, such as IMS NDTI), then the royalty rate set out in Section 8.1 above shall over the period of three (3) years be reduced to [***] % as follows: (i) by [***] percentage points to [***] % from the beginning of the calendar quarter following the calendar quarter in which the generic competition or on behalf the sales of Company the Second Product for off-label use in the Field exceeded the threshold of [***] percent [***]% of Exhale’s Net Sales for a period of six (6) months (hereinafter the “Royalty Reduction Date”); (ii) again by [***] percentage points to such Third Party[***] % from the end of the calendar year following the Royalty Reduction Date; (iii) again by [***] percentage points to [***] % from the end of the second calendar year following the Royalty Reduction Date; and, provided that(iv) from the end of the third calendar year following the Royalty Reduction Date and at any time thereafter, the royalty rate shall again be reduced by [***] percentage points and thus be [***] %. The royalty rate shall in no event shall the royalty reductions described in this Section 8.4.4(a) act to reduce the royalties payable by Company be reduced to less than [***] percent ([***]%) % under the terms of this Section 8.3. For the amounts payable by Company for a given [***] pursuant to Section 8.4.1. Certain information marked as [***] has been excluded from this exhibit because avoidance of doubt, it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. (b) If, during the Royalty Term in a particular country where one or more Generic Products with respect to a Licensed Product are sold in set forth herein that country, the royalty rates reduction set out in Section 8.4.1 shall be reduced: (i) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market; (ii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market; and (iii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market. (c) Notwithstanding the foregoing, in no event shall the royalty reductions described forth in this Section 8.4.4 act to reduce the royalties payable by Company to less than [***]8.3 will be triggered only once.

Royalty Reduction. Should (a1) If (i) Companythe Patents and the Orphan Drug Status expire before the Royalty Expiration Date and there be no Patent containing at least one Valid Claim and no Orphan Drug Status and no other statutory exclusivity be in place which would prevent the sale of a generic version of the Product, and should, in its reasonable judgmentthis situation, determines that it is required to obtain any generic product occur or (2) the Product be approved by the Health Regulatory Authority outside the Field based on an application by Schering, any of Schering’s Affiliates or a license from any Third Party in order to avoid infringement licensee of such Third Party’s Patent Rights as a result of Schering other than Exhale (hereinafter the practice of the BMS Patent Rights and/or the BMS Know-How in connection with the Development and/or Commercialization (but excluding manufacturing) of any Licensed “Second Product, (ii) such Third Party’s Patent Rights [***], and (iii) Company is required to pay to such Third Party a royalty or milestone payments in consideration for the grant or maintenance of such license (“Third Party Compensation”), then and should this Second Product be used off-label in the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall be reduced by Field, and should sales of these generic products or sales of the Second Product for off-label use in the Field exceed [***] percent ([***]] %) of all Exhale’s Net Sales in any six (6) months period (as measured for generic products by IMS data or similar data, and for off-label use through a recognized independent Third Party Compensation payable audit, such as IMS NDTI), then the royalty rate set out in Section 8.1 above shall over the period of three (3) years be reduced to [***] % as follows: (i) by [***] percentage points to [***] % from the beginning of the calendar quarter following the calendar quarter in which the generic competition or on behalf the sales of Company the Second Product for off-label use in the Field exceeded the threshold of [***] percent (15%) of Exhale’s Net Sales for a period of six (6) months (hereinafter the “Royalty Reduction Date”); (ii) again by [***] percentage points to such Third Party[***] % from the end of the calendar year following the Royalty Reduction Date; (iii) again by [***] percentage points to [***] % from the end of the second calendar year following the Royalty Reduction Date; and, provided that(iv) from the end of the third calendar year following the Royalty Reduction Date and at any time thereafter, the royalty rate shall again be reduced by [***] percentage points and thus be [***] %. The royalty rate shall in no event shall the royalty reductions described in this Section 8.4.4(a) act to reduce the royalties payable by Company be reduced to less than [***] percent ([***]%) % under the terms of this Section 8.3. For the amounts payable by Company for a given [***] pursuant to Section 8.4.1. Certain information marked as [***] has been excluded from this exhibit because avoidance of doubt, it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. (b) If, during the Royalty Term in a particular country where one or more Generic Products with respect to a Licensed Product are sold in set forth herein that country, the royalty rates reduction set out in Section 8.4.1 shall be reduced: (i) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market; (ii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market; and (iii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market. (c) Notwithstanding the foregoing, in no event shall the royalty reductions described forth in this Section 8.4.4 act to reduce the royalties payable by Company to less than [***]8.3 will be triggered only once.

Royalty Reduction. (a) If On a Product-by-Product and country-by-country basis, subject to Section 9.5.3(d) (Royalty Reduction), during any period in which (i) Company, such Product in its reasonable judgment, determines that it such country is required to obtain not Covered by a license from any Third Party Valid Claim in order to avoid infringement of such Third Party’s the Apellis Patent Rights as a result (for the avoidance of doubt, including Joint Patent Rights) in the practice of the BMS Patent Rights and/or the BMS Know-How in connection with the Development and/or Commercialization (but excluding manufacturing) of any Licensed Product, applicable country and (ii) such Third Party’s Patent Rights [***], and (iii) Company there is required to pay no Regulatory Exclusivity with respect to such Third Party a Product in such country, the royalty or milestone payments rate with respect to such Product in consideration for the grant or maintenance of such license (“Third Party Compensation”), then the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall country will be reduced by to [***] percent ([***]%) of all Third Party Compensation payable by or on behalf of Company the applicable rate set forth in Section 9.5.1 (Royalty Rate). (b) On a Product-by-Product and country-by-country basis, subject to Section 9.5.3(d) (Royalty Reduction), Sobi may deduct from the royalties otherwise owed to Apellis pursuant to Section 9.5.1 (Royalty Rate) with respect to such Third PartyProduct in such country, provided that, in no event shall the royalty reductions described in this Section 8.4.4(a) act to reduce the royalties payable by Company to less than [***] percent ([***]%) of the amounts payable any Third Party Payments paid by Company for a given [***] pursuant Sobi with respect to Section 8.4.1. Certain information marked as [***] has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosedsuch Product in such country. (bc) IfOn a Product-by-Product and country-by-country basis, if, during any Calendar Quarter during the Royalty Term for such Product in a particular country where one or more Generic Products with respect to a Licensed Product are sold in that such country, the royalty rates set out in Section 8.4.1 shall be reduced: (i) by [***], there are one (1) or more Generic Products or Biosimilar Products being sold in the event that in any calendar quarter such country with respect to such Product; and (ii) either: A. such Generic Product(s) or Biosimilar Product(s), by unit equivalent volume in such country, exceed a [**] percent ([*] *]%) share of the market;aggregate market in such country of such Product and all such Generic Product(s) or Biosimilar Product(s) (based on the number of units of such Product and such Generic Product(s) or Biosimilar Product(s) in the aggregate sold in such country, as reported by a well-known reporting service agreed between the Parties acting reasonably (e.g., [**])); or (ii) B. as a result of competition from Generic Products or Biosimilar Products in such country, the Net Sales of such Product are reduced by [**] percent ([**], %) in a Calendar Quarter when compared to the event that in any calendar quarter such Calendar Quarter before the entry of the relevant Generic Product(s), by unit equivalent volume Product or Biosimilar Product in such country, exceed a [***] share of the market; and (iii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the market. (c) Notwithstanding the foregoing, in no event shall the royalty reductions described in this Section 8.4.4 act to reduce the royalties payable by Company to less than [***].,

Royalty Reduction. (a) If (i) Company, in its reasonable judgment, determines that it Licensed Product is required to obtain a license from any Third Party in order to avoid infringement royalty-bearing only on account of such Third Party’s Patent Rights as a result of the practice of the BMS Patent Rights and/or the BMS Know-How in connection with the Development and/or Commercialization (but excluding manufacturing) of any Licensed Product, (ii) such Third Party’s Patent Rights [***], and (iii) Company is required to pay to such Third Party a royalty or milestone payments in consideration for the grant or maintenance of such license (“Third Party Compensation”Section 5.1(b)(ii), then the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall royalty rate set forth in Section 5.2(a) will be reduced by [***] percent ([***]%); and (b) Following a Change of Control of Licensee, the royalty rate set forth in Section 5.2(a) will be, subject to Section 5.2(b)(i), [***] ([***]). For clarity, this reduction shall apply only once under this Agreement upon the first Change of Control, and shall be applicable to all then existing and future Licensed Products. (c) In the event that during the Term, Licensee enters into an agreement with a Third Party pursuant to which Licensee is required to pay such Third Party royalties or other payments for a license under Patent rights that are reasonably necessary for the freedom to operate under the claims of any Patents within the AMF IP in connection with the manufacture, use or sale of Licensed Products in or for the Territory, then Licensee may deduct [***] ([***]) of all Third Party Compensation such amounts from the royalties otherwise owed to AMF pursuant to this Section 5.2(c); provided such deductions shall not result in the effective royalty rate that would otherwise be payable by or on behalf of Company Licensee to such Third Party, provided that, AMF in no event shall the royalty reductions described in this Section 8.4.4(a) act to reduce the royalties payable any particular calendar quarter being reduced by Company to less more than [***] percent ([***]%). (d) of In the amounts event that the royalties payable by Company under Section 5.2(a) are less than the Minimum Royalties for a given [***] pursuant to Section 8.4.1. Certain information marked as [***] has been excluded from this exhibit because it is both any calendar year beginning with 2018, AMF may, at its election, either (i) not material convert the exclusive licenses set forth in Section 2.1, or (ii) terminate this Agreement, in each case ((i) and (ii)) would effective upon sixty (60) days prior written notice to Licensee, provided however, that Licensee shall have the option at any time prior to the end of such sixty (60) days to pay to AMF the shortfall between the Minimum Royalties for such calendar year and the actual royalties paid or payable under Section 5.2(a), in which event the exclusive licenses set forth in Section 2.1 shall continue and this Agreement shall not terminate. For the purposes of calculating Minimum Royalties, any amounts paid under this Agreement shall be competitively harmful if publicly disclosedcreditable against amounts payable under the ex-U.S. License Agreement and any amounts paid under the ex-U.S. License Agreement shall be creditable against amounts payable under this Agreement. (be) If, during the Royalty Term in a particular country where Only one or more Generic Products royalty will be due under this Section 5.2 with respect to the sale of the same unit of Licensed Product. Only one royalty will be due under this Section 5.2 on the sale of a Licensed Product are sold even if the manufacture, use, sale, offer for sale or importation of such Licensed Product infringes more than one claim of the AMF Patents. (f) Licensee acknowledges that (i) certain of the AMF IP is secret and substantial and that without the AMF IP Licensee would not be able to develop Licensed Products, (ii) access to AMF IP may provide Licensee with a competitive advantage in the marketplace beyond the exclusivity afforded by the AMF Patents, and (iii) the royalties set forth in this Section 5.2 are, in part, intended to compensate AMF for such development and competitive advantage. The Parties agree that country, the royalty rates and period set out forth in Section 8.4.1 shall be reduced: (i) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share 5.2 reflect an efficient and reasonable blended allocation of the market; (ii) value provided by [***], in AMF to Licensee and was agreed to for the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share mutual convenience of the market; and (iii) by [***], in the event that in any calendar quarter such Generic Product(s), by unit equivalent volume in such country, exceed a [***] share of the marketParties. (c) Notwithstanding the foregoing, in no event shall the royalty reductions described in this Section 8.4.4 act to reduce the royalties payable by Company to less than [***].

Royalty Reduction. (a) If (i) CompanyOn a Product-by-Product and country-by-country basis, in its reasonable judgment, determines that it is required to obtain a license from during any Third Party in order to avoid infringement of such Third Party’s Patent Rights as a result period of the practice of Royalty Term for which a Product is not Covered by a Valid Claim in the BMS Patent Rights and/or applicable country, subject to Section 9.10.3(d), the BMS Know-How in connection royalty rate with the Development and/or Commercialization (but excluding manufacturing) of any Licensed Product, (ii) such Third Party’s Patent Rights [***], and (iii) Company is required to pay respect to such Third Party a royalty or milestone payments Product in consideration for the grant or maintenance of such license (“Third Party Compensation”), then the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall country will be reduced by to [***] percent of the applicable rate set forth in Section 9.10.1. ([***]%b) On a Product-by-Product and country-by-country basis, if (i) in BMS’s reasonable judgment, the Development (including Regulatory Interactions), Manufacture or Commercialization of all Resulting Compound or Product by BMS, its Affiliates, or any of its or their Sublicensees would infringe one or more Patents (excluding any Upstream IP) that are controlled by a Third Party Compensation payable and in the absence of a license under such Patent(s) would be infringed by the Development (including Regulatory Interactions), Manufacture or on behalf Commercialization of Company such Resulting Compound or Product in such country, and (ii) BMS obtains a license to such Patent(s) (collectively, “Third PartyParty Required IP”), provided thatthen, in no event shall the royalty reductions described in this subject to Section 8.4.4(a) act to reduce 9.10.3(d), BMS may deduct from the royalties payable by Company otherwise owed to less than Repare pursuant to Section 9.10.1 with respect to such Product in such country, [***] percent ([***]%) of the amounts payable by Company for a given [***] pursuant under such Third Party Required IP with respect to Section 8.4.1. Certain information marked as [***] has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosedsuch Product in such country. (bc) IfOn a Product-by-Product and country-by-country basis, if during any Calendar Quarter during the Royalty Term in for a particular country where Product there are one or more Generic Products or Biosimilar Products (as applicable) being sold in a country with respect to a Licensed Product are sold in that countrysuch Product, then the royalty rates set out payable under this Agreement with respect to such Product in Section 8.4.1 such country for such Calendar Quarter shall be reducedreduced as follows: (i) by [***], in the event that in any calendar quarter Calendar Quarter such Generic Product(s) or Biosimilar Product(s) (as applicable), by unit equivalent volume in such country, exceed a [***] share of the market]; (ii) by [***], in the event that in any calendar quarter Calendar Quarter such Generic Product(s) or Biosimilar Product(s) (as applicable), by unit equivalent volume in such country, exceed a [***] share of the market]; andor (iii) by [***], in the event that in any calendar quarter Calendar Quarter such Generic Product(s) or Biosimilar Product(s) (as applicable), by unit equivalent volume in such country, exceed a [***] share of the market. (c) Notwithstanding the foregoing, in no event shall the royalty reductions described in this Section 8.4.4 act to reduce the royalties payable by Company to less than [***].